A selection of weekly articles by top Bahamian commentators.

March 05, 2014

No Representation Without Taxation!

by Larry Smith

"The secret of success is honesty and fair dealing. If you can fake those, you've got it made." -- Groucho Marx

Outside of ZNS and other PLP circles, the outrage over tax dodging politicians and officials has been visceral as the government pursues a big increase in the average citizen's tax burden to reduce its fiscal deficit.

A few weeks ago it was revealed that Ishmael Lightbourne, the chief tax spokesman, had not paid property tax on his beachfront home out west or his commercial building in Palmdale for many years - up to two decades in fact. The bill amounts to well over $100,000 and cannot be attributed to recent hard times.

As the government’s chief VAT spokesman, Lightbourne has come in for some harsh criticism. Critics labelled his predicament as the grossest example of hypocrisy in recent times - although convicted Bishop Randy Fraser’s favours from his congregants ranks highest in my view.

And Prime Minister Perry Christie - the man who appointed Lightbourn - has simply avoided addressing the matter, no doubt hoping that the controversy will subside into irrelevance with the passage of time.

Lightbourne is an interesting case. In the 1970s he was an accountant in England - working on tax matters. By the 1990s he had become a managing partner at Coopers & Lybrand in Freeport. A recent newspaper article identified him as a “distinguished (and) talented professional accountant and business consultant with over 40 years experience.”

In the early 2000s Lightbourne was a PLP senator. But in 2002-03 he became involved with a Nigerian online investment scam, and was reportedly duped out of $1.5 million. The fraud was the subject of legal action in Nigeria, but it is unclear how much money was recovered, if any.

Coopers & Lybrand merged with Price Waterhouse in 1998 to become PriceWaterhouseCoopers, now called PwC, a global consulting firm with 180,000 employees. Lightbourne parted company with PriceWaterhouseCoopers in 2004, but there is no documentary information readily available to explain why.

Ironically, one of PwC’s current partners is Gowon Bowe, who is the co-chair of the private sector Coalition on Responsible Taxation, which was set up last year to pressure the government to undertake fiscal reform and growth policies in tandem with seeking new revenues.

Clearly, Lightbourn is not alone in his predicament. After being exposed as a tax dodger by the Guardian, the Tribune reported official figures showing about $392 million in uncollected property taxes on the government’s books - plus another $166 million in hypothetical penalties.

Labour and National Insurance Minister Shane Gibson then threatened to disclose the names of past and present opposition politicians who were delinquent in paying their taxes. “You should always pay your taxes, particularly when you are in government,” Gibson said, before acknowledging that he too had been delinquent.

Meanwhile, PLP Chairman Bradley Roberts seemed to confirm that the political class in general - and their cronies - are not paying taxes. “It’s not only brother Lightbourne,” Roberts said smugly. "There are many others who are sitting in influential positions…And from what I know (Lightbourne’s) tax is a small one."

After the initial shock had subsided, the spin doctors moved in. The website sometimes known as Fred Mitchell Uncensored sought to dismiss the disclosures as a case of a poor unfortunate who had fallen on hard times. “Lightbourne was fired from Coopers & Lybrand and could not work for years (until) the PLP rescued him by giving him a job,” Uncensored said, adding for good measure that, for the PLP, "not paying taxes is not a crime of moral turpitude.”

Another PLP parliamentarian was quick to confirm Mitchell's Rule that the PLP does not recognise moral turpitude. Leslie Miller suggested on television that he, too, owed taxes. And before the general election, it was Miller (who is now the chairman of the Bahamas Electricity Corporation) who admitted he did not pay his utility bills either. Miller also says politicians should never be required to disclose their tax status.

Elcott Coleby, the PLP’s point man at Bahamas Information Services, argued that since tax evasion and fraud were endemic in the country, it was hypocritical for anyone to complain about the imposition of VAT, which he claimed would only improve tax compliance. "Ronnie Butler said it best when he sang 'I know them long time - them people is mine’”, Coleby said, with tongue in cheek.

Or as one commenter on Facebook put it, "This is no anomaly. There are tens of thousands who have not paid their taxes, and I will assume the majority because they can't pay, second to those not notified.“

Meanwhile, Lightbourne's fellow PLP accountant, Phil Galanis, pointed out that firing every public official who has succumbed to the national reluctance to pay taxes would leave very few standing. He argued that, as a result, the government should be careful not to make the new tax overly burdensome lest it lead to even more evasion.

Deputy Prime Minister Philip Davis advised the public to focus on the message and not the messenger, in the case of Lightbourne. Well clearly the message to be learned from this is - you don’t have to pay your taxes. So where does that leave the government?

Amongst some in the intelligentsia, the confirmation that many of our business and political leaders are cavalier tax cheats is grist for the mill.

As one thoughtful commenter put it, "hypocrisy is the root cause of all of the problems we face in this country: Deport the illegal immigrants, but leave my undocumented worker; pay your real property taxes, but turn a blind eye when I fail to file my declaration of assets, income and liabilities; pay VAT even though I have not paid my real property taxes; and on and on. We cannot continue to maintain this fairy tale. We are facing very real problems and the only way to solve them will be to first admit that they exist.”

In one of his more cogent sound bites since becoming opposition leader, Dr Hubert Minnis said "If the government is not prepared to deal with its own and not prepared to enforce laws, then what the hell we doing in parliament passing laws?”

The Guardian, which launched the expose, probably encapsulated the issue best in a recent editorial: Lightbourne, the government’s tax messenger, is not paying his taxes while at the same time advocating for Bahamians to pay their way. “The public is curious to know who is comfortably being hypocritical in our parliament, asking Bahamians to pay more when they pay little or nothing.”

And more recently, “In a democracy, it is expected that those who make the laws would be in full compliance with those laws."

This is really the nub of the issue. It is not just a matter of amusement about Bahamians being generally undisposed to pay their taxes and bills. Rather, those responsible for making laws and leading society are escaping their obligations. And that has broader consequences for everyone.

Consider this comment from Facebook: “We are taxed, but our representatives aren't. I suppose the rallying cry of our movement should be - no representation without taxation. With Independence and freedom come responsibility, but our leaders have totally dropped the ball on that. Their message is, freedom without responsibility - a sure recipe for failure.”

The background to all this is secretive government - the lack of public and press access to official information. We don’t know what the true story is. We only have the hints and suggestions of our face-saving politicos to go by. A properly constructed freedom of information law would help to break through this conspiracy of silence.

However, rather than implementing the freedom of information act that was passed just before the election (but conveniently left up in the air by the FNM), the government is talking about prosecuting whistleblowers and information leakers under the Data Protection Act.

We are entitled to information about our leaders and whether or not they have fulfilled their obligations. This is public information. And the rule of law requires that it be disclosed. It is essential to good governance. How else can we hold our leaders accountable? How else can we gauge the credibility of whatever they say?

The first order of business for the government should be the disclosure of the tax status of all MPs and senior civil servants. And if you can’t take the heat, get out of the kitchen.

And here’s a parting thought for you, dear reader. On March 19, Perry Christie will give a plenary talk on the Ethical and Anti-Corruption Framework of the Bahamian Government at a conference on governance in the Cayman Islands.